The Czech koruna erased part of its previous losses on Friday, as got lift from NBS’s intervention in favour of the Slovak koruna. The Czech currency opened rather weak at the low sixties, but it quickly shot up to EUR/CZK 30.44 when the Slovak central bank started to sell euros. The Czech koruna was sensitive to any positive impulse after exaggerated negative reaction to interest rate cut. However, the unit slowly lost ground in the rest of day to close at 30.55, only few hellers stronger than day before.
Today there is only few reasons why the koruna should go higher, as overall environment is still negative. First of all, the EUR/USD dipped below 1.29, which is negative for all emerging markets. Low activity on Polish markets might hampered activity even on Czech FX market. Today’s state budget balance release hardly affect the market, although it should post significant deficit. Hence the koruna may trade in sideways range of 30.45-60.
(CSOB - Investment research)